October 4, 2009 in Business

Fueling a new industry

Companies turn waste wood into energy
By The Spokesman-Review
 
Kathy Plonka photo

Mike Christensen, left, and Jason Brink of ABCO Wood Recycling work at the site in Post Falls last week.
(Full-size photo)

By the numbers

About 60 percent of ABCO Wood Recycling Inc.’s raw material comes from logging slash. The remaining 40 percent is urban wood waste, including construction debris.

When Shawn Montee finished a logging job, thousands of BTUs of energy used to go up in smoke.

His crews gathered up the logging slash and torched it. To Montee, one of North Idaho’s largest logging contractors, the blazing slash piles always seemed like a waste.

“There was all this good biomass,” he said. “It was sad to see it go up in flames.”

Five years ago, Montee started a spinoff company, ABCO Wood Recycling Inc. Working with three grinders and a crew of 45, the company turns logging slash and other wood waste, such as construction debris, into biofuels.

ABCO produces 20 to 25 truckloads of the fuel daily. The 3-inch to 5-inch wood chips are trucked to burners in Eastern Washington, Idaho and Montana.

“All of the wood we recycle is burnt for electricity or steam,” said Reid Ahlf, ABCO’s general manager. “We’re able to salvage a significant portion of wood waste that would otherwise end up in landfills or burn piles.”

The wood powers boilers at the University of Idaho’s campus, provides energy for the Clearwater Paper Co.’s Lewiston plant, and creates electricity for an Avista Corp. biomass plant in Kettle Falls. It also supplies energy for a container board plant in Montana.

As the nation searches for alternative fuels, one of the world’s oldest energy sources is coming back in vogue. In the Inland Northwest, woody biofuels hold tremendous promise. But despite abundant forests and an established timber industry, the industry is still in its infancy here.

“We have an unlimited supply of biomass. It’s just the cost,” said Mickey Buell, an employee of Jack Buell Trucking in St. Maries.

The firm – better known for trucking logs to sawmills – purchased its first chipper eight years ago. Like ABCO and other biofuel suppliers, Buell Trucking saw the opportunity to turn logging slash into a viable product.

But the venture’s economics remain tenuous, Buell said. Energy is a commodity, he noted, and wood is always competing against other energy sources. When wholesale natural gas prices recently dropped to record lows, wood became less attractive as a fuel source.

Suppliers also operate on a thin margin, Buell added. Operators earn roughly $25 a green ton for woody biofuel. The profit evaporates if the material is trucked too far, Buell said.

Getting started in the business is also costly. Grinders powerful enough to tear through nail-studded construction debris and logging slash piles can run from $450,000 to $700,000. ABCO employs three mechanics just to keep its grinders, chip trucks and excavators running.

“It’s so capital intensive,” said Tim Davison, the owner of Diversified Wood Products of Spokane, another biofuel supplier. “I put $1,000 worth of fuel into the grinder each day. … It’s challenging to make a profit.”

To encourage more people to get into the business, the federal government has started offering subsidies. A Farm Services Administration program authorizes matching payments of up to $45 per ton to suppliers of woody biofuel. Last year, the program’s budget was $25 million.

“It’s intended to help kick-start this industry,” said Rod Hamilton, a supervisor for the Farm Services Administration in Spokane.

Suppliers can qualify for the subsidy for two years, but they must sell to a federally certified plant. So far, just 30 purchasers of biofuels are federally certified. Idaho has just one certified plant. Washington has none. But that could change, Hamilton said, as more operators become aware of the program.

Kris Bellini, a contracting officer on the Colville National Forest, is among those hoping to see the market for biofuels expand. The national forests are full of potential for renewable energy, he said. Last year, the Colville National Forest awarded a contract to ABCO to chip 19,000 tons of logging slash from several timber sales.

“It cost us $147,000, which sounds like a lot of money,” Bellini said. “But we would have spent as much to pile it up and burn it. It would have put a lot of smoke in the air, and wasted a lot of energy.”

ABCO, which started with one recycling yard in north Spokane, has expanded to seven operating sites across the Inland Northwest. Four more recycling yards are in the works. The newest yard, in Richland, will supply fuel to a pulp plant in Wallula, Wash.

While ABCO is still a break-even venture, Montee – the owner – said he’s confident about the company’s long-term prospects.

“I’ve invested millions of dollars in this for the long haul,” he said. “I just had a gut feeling that this stuff was going to be worth something one of these days.”

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